Bank Branches Research Articles

Growing beyond trade: Export shocks and the spatial expansions of bank branching

AbstractThis paper empirically examines the impact of tariff reductions for exporters on banks' location choices with geo‐referenced information on subsidiaries and branches of China's state‐owned and joint‐stock banks. We construct prefecture‐level tariff barrier changes faced by exporters from 2001 to 2007 and identify the impact by exploiting within‐bank cross‐prefecture changes in bank branching patterns. The empirical results suggest a positive and significant pass‐through from export expansion to banks' geographic expansion. Specifically, a 10% export tariff reduction would induce a 1.88% increase in the local number of bank branches. This result holds under a battery of robustness tests. Mechanism tests suggest that increased credit demand in the corporate sector, both at the intensive and extensive margins, is the main channels that explain the baseline patterns. The findings in this paper offer valuable insights into the relationship between internationalisation and financial development.

Impact of Financial Intermediation and Regulatory Frameworks on Financial Deepening and Economic Growth: Insights from Lesotho

Purpose: The purpose of this study is to analyse the impact of financial intermediation and regulatory frameworks on financial deepening and economic growth in Lesotho, utilizing data from 2003 to 2022. The objective is to explore the relationships between selected financial and economic indicators and assessing their influence on financial deepening. Methodology: This study utilized secondary time series data, which poses challenges regarding authenticity and reliability since it was collected by external parties. However, these concerns were addressed by using data from reputable global agencies like the IMF, World Bank, and the Central Bank of Lesotho’s annual report from 2003 to 2022. The analysis was conducted using the Ordinary Least Squares (OLS) regression method. Findings: The findings highlight the complex role of financial intermediation and regulatory frameworks in shaping financial deepening and economic growth. Higher cash reserve ratios and treasury bill rates negatively affect financial deepening by reducing liquidity and increasing credit costs. However, increased commercial bank deposits with the central bank positively contribute to financial stability and deepening. Moderate inflation also fosters financial deepening by raising the nominal value of financial assets. While ATMs per capita enhance financial access and growth, an increase in bank branches per capita shows inefficiencies, underscoring the need for effective infrastructure and service delivery. Unique Contribution to Theory, Policy and Practice: The study suggests that policymakers should adjust cash reserve requirements, monitor credit expansion to avoid over-lending, and improve banking infrastructure. It highlights the need for careful interest rate management and promoting financial innovation to enhance market depth.

THE FINANCIAL LIBERALIZATION POLICY AND ITS IMPACT ON THE GROWTH OF SMALL AND MEDIUM ENTERPRISES

The country's development is mainly concerned with the foundation of a stable economy. An efficient financial system is mandatory for the development of solid economy. Small and Medium Enterprises (SMEs) are essential in stabilizing the economy. This is remarkably accurate in emerging economies like Pakistan. The objective of financial liberalization is to facilitate financing access and stimulate investment. However, the impact of this policy on SMEs can vary based on factors such as the regulatory framework, market structure, and institutional support. Therefore, it is crucial to assess the impact of financial liberalization on SMEs to foster inclusive economic growth and shape policy development. The study intends to find whether or not the growth of small and medium enterprises depends upon the government's financial liberalization policies. Using the ARDL econometric method, we find that Shareholder’s Equity is positively associated with SME growth rate, holding other variables constant. Moreover, total assets positively affect the SMEs' growth rate. Financial Development does not have a statistically significant effect on SME growth in the short run. Economic Growth rate positively influences SME growth. External financing changes may not immediately affect SME growth in the short run. The results show that changes in the number of bank branches do not significantly affect SME growth in the short run.

EVALUATING CUSTOMER SATISFACTION IN A PRIVATE BANK: INSIGHTS FROM A SURVEY IN BANGLADESH

Customer satisfaction is essential for a bank's success and loyalty. Satisfied customers are more likely to be loyal and recommend the bank to others. This study explores customer satisfaction at a branch of a private bank in Bangladesh. A survey questionnaire was utilized, and feedback was received from 100 customers. The analysis, based on mean and standard deviation, shows overall high satisfaction but highlights several areas of concern. Key issues include limited branch space, inadequate staffing, and dissatisfaction with cleanliness and customer service. The customers were largely neutral in their opinions on debit/credit card services and online banking. By improving poor areas, the bank can foster stronger customer loyalty and better service experiences.

Creditworthiness Criteria According to the 5Cs Model and Credit Decision: The Moderating Role of Intellectual Capital

The current study aims to examine how creditworthiness criteria based on the (5Cs) model with its dimensions (character, capacity, capital, conditions, and collateral) on the credit decision in the presence of intellectual capital as a moderating variable applied to the branches of Jordanian commercial banks in the southern governorates of Jordan. The study included 449 populations from these branches, with a sample size of 205 employees. The authors employed a quantitative approach and utilized Macro PROCESS v4.2 by Andrew F. Hayes for analysis within SPSS v.28 software to achieve the study objective and test its hypotheses. According to the findings of the study, there is a positive effect of creditworthiness criteria based on the (5Cs) model on the credit decision. Furthermore, the study discovered that there is a presence of a moderating role of intellectual capital on the relationship between creditworthiness criteria based on the (5Cs) model and the credit decision. The study recommends that banks should prioritize investing in training programs for employees to improve their ability to assess credit risk accurately.

Does bank FinTech spur productivity of SMEs?

ABSTRACT Financial technology (FinTech) has promoted the popularization of intelligent banking services and profoundly impacted the development of small and medium-sized enterprises (SMEs). Based on manually collected over 20,000 data on FinTech patents of banks and data from Chinese A-share listed firms in the Growth Enterprise Market board from 2010 to 2020, we investigate the effects of Bank FinTech on the total factor productivity (TFP) of SMEs. Our results demonstrate that Bank FinTech significantly boosts the TFP of SMEs. The conclusion remains unchanged after conducting a series of robustness tests. Furthermore, we find that strengthening external financial regulation and internal digitalization in SMEs enhance the driving effect of FinTech on the TFP of SMEs. Moreover, heterogeneity analysis indicates that Bank FinTech is particularly beneficial for promoting TFP in non-state-owned SMEs, SMEs with large sizes and old age, and SMEs in the East and with dense bank branches. Our research offers empirical evidence on how Bank FinTech influences SMEs’ production efficiency, which is crucial for the technological catch-up of SMEs and for enhancing the ability of Bank FinTech to serve the real economy.

Local credit and international trade

AbstractThis study investigates the relationship between local access to credit and exports. A model of finance‐constrained exporters and bank entry decisions generates trade equations that we estimate with a panel of Brazilian municipal‐level trade and banking data. Literature in the financial development field has struggled to deal with the endogenous relationship between finance and economic outcomes. To untangle this reverse causality, we instrument bank presence by using geographic characteristics particular to the bank branching decision. The results show that local bank access matters: increases in bank branches per person increases bilateral exports and varieties at the city‐ and industry levels. The effect is even stronger for industries where the credit constraint binds, specifically those that use less internal funds and have more difficulty producing collateral.

Good corporate governance at the unit level: Insights from a State-Owned Bank Branch

Good corporate governance at the unit level: Insights from a State-Owned Bank Branch

Bank competition and ESG performance‐evidence from Chinese listed firms

AbstractThis study employs a two‐way fixed effects model to investigate the influence of bank competition on ESG performance of local firms and its underlying mechanisms based on the geographical distribution of bank branches and firms. Our results show that the increased level of competition among banks contributes positively to the ESG performance of firms and the promotion effect is more prominent in small firms, young firms, and nonstate‐owned firms. Industry heterogeneity analysis indicates that bank competition could be more beneficial for the sustainable development of low‐pollution, low‐tech industries, and industries that have a higher linkage with the financial industry. The mechanism analysis further reveals the mediating effect of financial constraints, green innovation, and moral hazards on firms' ESG performance. This study extends the existing understanding of the firm‐level consequences of bank competition and sheds light on the financial development drivers of corporate ESG performance in emerging market countries.

Efficiency analysis in bi-level on fuzzy input and output

To enhance the conventional framework of data envelope analysis (DEA), a novel hybrid bi-level model is proposed, integrating fuzzy logic with triangular fuzzy numbers to effectively address data uncertainty. This model innovatively departs from the traditional DEA’s ’black box’ approach by incorporating inter-organizational relationships and the internal dynamics of decision-making units (DMUs). Utilizing a modified Russell’s method, it provides a nuanced efficiency analysis in scenarios of ambiguous data. The study aims to enhance the accuracy and applicability of Data Envelopment Analysis in uncertain data environments. To achieve this, a novel hybrid bi-level model integrating fuzzy logic is presented. Validated through a case study involving 15 branches of a private Iranian bank, the model demonstrates improved accuracy in efficiency assessments and paves the way for future research in operational systems uncertainty management. The results indicated that, among the 15 branches of a private Iranian bank analyzed for the year 2022, branches 1, 10, and 11 demonstrated leader-level efficiency, while branch 3 exhibited follower-level efficiency, and branch 1 achieved overall efficiency. These branches attained an efficiency rating of E++, signifying a high level of efficiency within the model’s parameters.

Financial inclusion, ICT development and economic growth in WAEMU countries: evidence of governance

PurposeThe main objective of this paper is to examine how short- and long-term dynamics can be promoted through economic growth policies, financial inclusion initiatives, institutions and ICT infrastructure development. The study focuses on West African Economic and Monetary Union (WAEMU) member countries over for the period 2000–2020 and the empirical evidence is based on the autoregressive distributed lag (ARDL) method. Our empirical results show that the synthetic index variables of financial inclusion, ICT infrastructure development and individual or composite governance institutions indicators are positively and significantly interrelated in both the short and long runs. A dynamic combination of variables is essential for WAEMU countries to achieve long-term economic development. Policy implications are discussed.Design/methodology/approachConsistent with our goal of testing the dynamics of financial inclusion, governance and ICT on economic growth, we will estimate our equations using the ARDL panel method. ARDL models or autoregressive models with staggered or distributed delays are dynamic models. The particularity of these models is that they take into account temporal dynamics (i.e. expectations, adjustment delays and inter alia), so we adopted a lagged autoregressive model (ARDL). The popularity of the ARDL approach also stems from the fact that the cointegration of nonstationary variables is equivalent to an error correction (EC) process.FindingsThe empirical results simultaneously depict strong endogenous associations between these variables in the short and long run. The short-run analysis indicates that economic growth, financial inclusion, institutional quality and ICT infrastructure development are strongly interdependent. These union states, in their economic growth policies, encourage the financial inclusion (access and penetration of bank branches) of disadvantaged communities. However, efficient institutional policies reinforce this sustainable growth. The efficient use of telecommunications infrastructure requires the regulation of informal employment in WAEMU countries for the better deployment of efficient, secure and cost-effective digital financial payment systems (fintech).Research limitations/implicationsThe findings in this study evidently leave space for future research, especially as it concerns considering how composite governance can be employed as a moderating indicator for financial inclusion. In conclusion, there is an interdependence between financial inclusion, ICT, institutions and economic growth. An effective combination of these elements can create an ecosystem conducive to economic development by promoting access to financial services, harnessing the benefits of ICT and building robust institutions. However, challenges can also arise, such as the need for appropriate regulations and security guarantees for electronic transactions.Practical implicationsGovernments should strengthen financial inclusion and promote policies aimed at improving access to financial services, such as microcredits, mobile banking and initiatives for the unbanked. Financial education is crucial for enhancing financial inclusion. Educational programs that teach citizens how to use financial services can increase participation and stimulate economic growth. Moreover, policies should focus on improving digital infrastructure, such as broadband networks and data centers, to facilitate access to the internet and other technologies and to promote innovation and startups. Governments should strive to create a balanced regulatory framework that encourages investment and innovation while avoiding excessive regulation that could hinder growth. Implementing targeted regulatory reforms to improve efficiency and transparency can enhance investor confidence and support a more dynamic economic environment.Originality/valueThis work constitutes a considerable contribution to the literature on finance, institutions and growth in WAEMU countries and in terms of methodology. The findings in this study evidently leave space for future research, especially as it concerns considering how composite governance can be employed as a moderating indicator for financial inclusion. In conclusion, there is an interdependence between financial inclusion, ICT, institutions and economic growth. An effective combination of these elements can create an ecosystem conducive to economic development by promoting access to financial services, harnessing the benefits of ICT and building robust institutions.

Emotional Intelligence as a Strategic Driver of Competitive Advantage and Service Quality in the Banking Industry

This research aims to determine whether emotional intelligence (EI), particularly in government-owned commercial banks, is a valid measure of service quality in the banking sector. The study aims to ascertain how emotional intelligence (EI) raises the caliber of services, with a particular emphasis on the departments of operations, credit, and customer service. Using a quantitative methodology, data were collected through purposive sampling from 284 employees in particular bank branches in Kathmandu. The findings show that emotional intelligence (EI) and service quality are highly correlated. Workers with higher EI are more adept at managing their emotions, positively relating to clients, and offering superior customer service. Self-awareness, social awareness, and relationship management are crucial in enhancing service quality, with relationship management exerting the most significant influence. The study's limited scope focusing only on government-owned banks in a particular area may restrict its applicability opening up new avenues for future studies on emotional intelligence in private banking and other sectors of the economy.

Microfinance, Financial Inclusion and Economic Welfare in Africa: A Panel Investigation

This study explores the relationship between microfinance, financial inclusion, and economic welfare in a sample of 23 African countries for the period of 2004 to 2023 using annual time series data. We measured microfinance with the number of Branches of Microfinance banks, Microfinance Borrowers, Microfinance outstanding deposits, Microfinance outstanding loans; financial inclusion number of registered mobile money accounts per 1,000 adults; the number of mobile money agent outlets par 1,000 adults; and digital card ownership; governance and institutional quality with Rule of law, regulatory quality, and government effectiveness; and economic welfare with household consumption; while we controlled for the inflation rate, interest rate and exchange rate. These variables were estimated using Panel Least Squares, Fully Modified OLS (FMOLS), Dynamic OLS (DOLS), and Panel Autoregressive Distributed Lag (ARDL) estimation techniques. The result of the cointegration revealed that cointegration exists between the variables of the model. Findings from the aforesaid estimation techniques show that there is the existence of long-run relationships between microfinance, financial inclusion, and economic welfare since the coefficients of the microfinance and financial inclusion variables are statistically significant. The coefficients of the error correction terms which measure the effects of the short-run dynamics of the model suggest that the speeds of adjustment from the long run to the short run in the models would be 76%, 61%, 83%, 67%, 68%, 34%, and 80% respectively for all the specified models. Following the findings of the study, conclusions were drawn and the study suggests that microfinance institutions should adapt to the digitization of their products and services for wider coverage on one hand; the government should provide digital financial amenities to create a fertile ground for micro-financial institutions to rely on to maximize the welfare of the economy.

The sale of failed banks: The importance of their branch networks and of the acquirers’ financial strength

This paper investigates the pricing of insolvent banks in the U.S. that are sold under the purchase and assumption resolution method of the Federal Deposit Insurance Corporation (FDIC). We consider quarterly data for 444 acquisitions of insolvent U.S. banks between 2009 and 2016. We find that acquirers not only pay higher prices for insolvent banks with larger core deposits, as has been highlighted by the literature (and is consistent with the FDIC’s beliefs), but also for those banks with larger branch networks that are less dispersed geographically. When the acquirers bid (separately) for the assets of the insolvent banks, they place a positive value on the number of branches of the insolvent bank, but appear to be insensitive to geographic dispersion. Acquirers also pay more for banks with a national charter. The results additionally show that failed banks are most likely to be acquired by relatively large and highly capitalized banks whose organic growth is not affected in the years following the acquisition. Overall, our findings contribute to a better understanding of the implications of the purchase and assumption resolution method for the FDIC and for the banking industry.

Prospects for the development of foreign economic activities of the Russia banking sector in China

Relevance. In modern conditions of economic uncertainty and difficulties of doing business in connection with the application of sanctions, banks need to look for effective tools and ways to increase the effectiveness of mutual cooperation with other states to overcome the prevailing circumstances. During the work, the main aspects of opening and functioning of a bank branch in China were considered, as well as competitors at both the macro and micro levels were analyzed. Based on the SWOT analysis, the paper identifies the strengths and weaknesses, opportunities and threats of introducing a branch of a Russian bank into the Chinese banking market. The study identifies promising regions for the development of foreign economic activity and forms a range of banking services that contribute to the sustainable development of the branch of the Russian bank in the foreign market.The purpose of the study is to substantiate the need to develop the foreign economic activity of a Russian commercial bank in China.Objectives: Based on a comprehensive analysis and acceptability of the Chinese banking services market, an assessment of the current state of PJSC Expobank, an analysis of competitors in the proposed region and the specifics of a specific location, to develop a plan for opening a bank branch in China.Methodology. The study is aimed at achieving this goal and is based on a review of scientific research by both domestic and foreign economists, as well as an analysis of a number of requirements for opening a bank branch in China.Results. In the course of the work, the process of opening a bank branch in China for carrying out activities was analyzed, the advantages and disadvantages of expanding the boundaries of presence were identified, and promising areas for starting foreign economic activity were proposed.Conclusions. The conducted research gives grounds to conclude that the expansion of the geographical presence in China will allow PJSC Expobank to gain access to world economic centers and expand the boundaries of its activities.

Adoption of mobile banking to promote financial inclusion among rural farming community: Drivers and satisfaction level perspective

This study investigates the factors driving mobile banking adoption and user satisfaction to enhance financial inclusion among rural farming communities, using survey data from 400 farmers. An unpaired t-test reveals a significant difference in receiving international remittance, fund transfers, mobile recharge, and allowance during and before COVID-19, but no significant difference in cash-in, cash-out, and utility bill payments. During the pandemic, most mobile banking transactions increased in volume and frequency. The result also reveals that the majority of rural people (approximately 88 %) enjoy mobile banking services. The Index value of farmers' satisfaction level towards mobile banking transactions indicates that respondents were satisfied with various mobile banking transactions but were dissatisfied with the higher service fees. Logit estimation shows that age, education, income, farm size, and distance from the bank branch were the primary factors driving the adoption of mobile banking among rural farming communities. However, expansion of agent service, reduction of service charges, and protection from fraudulent transactions are essential for expanding the adoption of mobile banking services in rural areas and accelerating their financial inclusion.

Religion and branch banking

This study aims to examine whether religion influences branch banking. Using a large sample of U.S. county-level branch banking and religious characteristics data between 1994 and 2018, we find that the local religiosity of the bank headquarters’ region is positively related to the presence of bank branches. By contrast, banks in regions with more Catholics than Protestants are less likely to have branches. Moreover, religious diversity negatively affects branch banking. Overall, our study highlights the significant role of local religions in branch-banking decisions.

Financial geographic structure and innovation quality: Evidence from Chinese firms amid economic policy uncertainty

In countries where indirect financing dominates, the geographic distribution of financial resources to firms is crucial in enhancing credit availability and improving innovation quality. This study examines the impact and heterogeneity of financial geographic structure on firm innovation quality. Using the number of bank branches surrounding Chinese listed companies as a proxy for financial geographic structure, we employ a multidimensional fixed effects model and Heckman's two-stage method, finding that a higher density of bank branches significantly enhances firms’ access to credit. This fosters innovation by increasing invention patent applications in high-tech non-state-owned enterprises and green patent applications in non-high-tech state-owned enterprises. However, as economic policy uncertainty increases, the positive effect of financial geographic structure on firm innovation diminishes. Hence, countries facing substantial policy uncertainty and relying on indirect financing must strengthen multilevel financial markets and encourage commercial banks to provide greater support for firms pursuing higher levels of innovation.

Rural financial institutions, access to credit and production inputs of rural households

This paper studies the impact of rural financial institutions on farmers' production input from the perspective of rural bank branch adjustment and rural household credit access. Based on the data of rural bank outlets and China Household Income Survey (CHIP) in 293 prefecture-level cities in China from 2013 to 2018, the results show that rural financial outlets have a significant positive impact on farmers' production input, and each unit increase in the number of bank outlets will increase farmers' production input by 0.24 units, and the proportion of consumer expenditure will decrease by 0.071 units. The number of bank outlets has significant heterogeneity of household head and region on the production input of farmers, and the bank outlets have a greater impact on the production input of farmers with high education level. The increase in the number of bank outlets in the eastern region can significantly increase the production input of farmers, but the increase in the number of bank outlets in the central and western regions will reduce the production input of farmers. The mechanism analysis shows that the increase of branches of rural financial institutions improves farmers' access to credit, which is an important channel affecting farmers' production input. This study provides a reference for the reform of rural financial institutions and the revitalization of rural industries in China.

Using AMAZON REKOGNITION artificial intelligence to recognize bank branch solar panels.

Bank branches carry out quality control of solar panels that ensure energy independence and uninterrupted operation of computer equipment in the conditions of an aggressive war caused by Russia, to ensure that the solar panels meet production standards and avoid potential damage to the brand reputation. As sensor costs decrease and connectivity increases, industry is using real-time image analysis to detect quality issues. At the same time, advances in artificial intelligence (AI) enable advanced automation, reduce overall project cost and time, and provide accurate defect detection results in manufacturing plants. As these technologies evolve, AI-assisted inspections are becoming more common outside of the factory environment.